Alight (ALIT) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue was $534 million, down 2.6% year-over-year, with recurring revenue at $498 million and project revenue at $36 million, reflecting a 4.2% decline in recurring and a 28.6% increase in project revenue.

• Adjusted EBITDA was $104 million (19.5% margin), down from $118 million (21.5% margin) in Q1 2025, but exceeded expectations.

• Free cash flow increased 20% year-over-year to $53 million, driven by higher operating cash flow and lower capital expenditures.

• Net loss from continuing operations was $19 million, compared to $17 million in Q1 2025.

• Leadership changes included a new CTO and President of Employer Solutions, with expanded account coverage and AI initiatives to enhance service and operational efficiency.

Financial highlights

• Adjusted gross profit was $189 million (35.4% margin), down from $200 million (36.5% margin) in Q1 2025.

• Gross profit was $156 million (29.2% margin), down from $171 million (31.2%) year-over-year.

• Interest expense increased by $2 million year-over-year to $24 million.

• Depreciation and amortization rose by $5 million, mainly due to capitalized software.

• Liquidity at quarter-end exceeded $500 million, including $178 million in cash and $330 million available on the revolver.

Outlook and guidance

• Q2 2026 revenue expected between $490 million and $505 million; adjusted EBITDA between $80 million and $90 million; free cash flow guidance of $35 million–$45 million.

• Revenue growth is expected to remain challenged in 2026 due to continued client contract losses and lower-than-expected bookings.

• Solid free cash flow generation expected for the year, with conversion rates in the 44%–50% range.

• The company expects annual savings of over $75 million after completion of the Post-Separation Plan restructuring.

• Revenue under contract stands at $2 billion, with 94% recurring.